The process of top bureaucrats in New Delhi heading the selection panels to identify the right candidates for top positions in regulatory bodies has now been extended to the Reserve Bank of India (RBI). The successor to RBI deputy governor HR Khan will now be identified by a panel headed by Cabinet secretary PK Sinha. Earlier, RBI governor used to head the panel for the selection of deputy governor.

In the new scheme of things, the Sinha panel, which will interview the prospective candidates — RBI executive directors — will include Raghuram Rajan as a member. The selection of Khan’s successor has come at a time when the extension of Raghuram Rajan’s tenure as the RBI Governor has come under intense speculation with BJP MP Subramanian Swami asking the government to not renew his term.

In fact, the search panels for top positions in other regulatory bodies like the Sebi and insurance regulator IRDAI are headed by top Central government bureaucrats, and not the chief of these regulatory bodies. The interview panel for the selection of two Members (life and non-life) for IRDAI last year was headed by the then financial services secretary Hasmukh Adhia. This panel included IRDAI chairman TS Vijayan and former head of LIC and Sebi GN Bajpai.

Similarly, the term of current full-time Sebi Member Prashant Saran will end in June. A panel headed by a Cabinet secretary will select the new member. TS Vijayan was selected as IRDA chairman by a search panel headed by the then financial services secretary DK Mittal in 2013.

Earlier when RBI deputy governor Urjit Patel’s three-year term ended in January this year, he was given a three-year extension after a search committee headed by Rajan interviewed several aspirants. The RBI Governor used to head the panel for selection of deputy governors.

“It’s for the first time that the RBI deputy governor is being selected by a panel headed by a top Central government bureaucrat. In fact, the appointments of governors, chairmen of Sebi, IRDAI and PFRDA are approved by the Appointments Committee of the Cabinet. They are statutory bodies formed under different Acts of Parliament,” said an official source.

“One should not read too much into Rajan not heading the search panel for Khan. When the government appointed a panel to search for a successor to Sebi chairman UK Sinha last year, the panel was headed by Cabinet secretary with economic affairs secretary as a member, among others, but the provision of the finance minister nominating up to two persons as members was done away with,” said a source.

HR Khan had a five-year term as the RBI deputy governor in charge of financial markets and infrastructure. The RBI has four deputy governors: Two internal appointments (Khan and R Gandhi), one commercial banker (former Bank of Baroda chairman SS Mundra) and an economist to head the monetary policy department (Urjit Patel). RBI executive directors including M Patra, Deepali Pant Joshi, Chandan Sinha, NS Vishwanathan and Deepak Mohanty are expected to attend the interview for the deputy governor post.